Chief financial officers from First State Super, Unisuper and Equip and leading advisors have called on the government and the Australian Prudential Regulatory Authority to better explain their intent on portfolio disclosure.
They say sensible reform can only take place once this is explained.
In a debate held at the Investment Magazine offices, the group explored what feedback it could give to the Treasury in its review of the portfolio holdings disclosure requirements for July 2014.
This asks which model of disclosure would best achieve an appropriate balance between improved transparency and compliance costs.
John Rodd, chief financial officer of Equip, said that while it was reasonable to expect members to see what their fund was invested in, it was a flawed premise to expect members to understand why the securities were owned in the first place.
“One thing that is never discussed about superannuation is the investment risk we are taking and managing for our members,” he said.
Several speakers made the point that data running into tens of thousands of items would if anything hinder member comprehension.
It was the suggestion of John Creeley, chief financial officer of First State Super, that APRA should conduct consumer testing to see what volume of information was desired by the public.
The group questioned whether the real intention was to inform APRA and for the government’s bid to increase transparency within financial services.
Maged Girgis, partner and head of Australian superannuation practice at Minter Ellison, thought it was largely about APRA wanting to keep a check on how money was being invested and spot concentration risk.
However, the intentions were not clear to the group.
Girgis said: “The real question is what do they need it for? Because there is a cost for this and one does not want to pay a cost if there is not a good reason for it. Can the requirement be set in a way that funds are not paying a high price?”
The banking and insurance sectors currently both provide regulators with disclosure of their assets and risk, but as much of this is managed in-house it is easier for them to calculate than for superannuation funds.
Mark Neary, managing director, business development, Asia-Pacific, Milestone Group, said: “This industry has a federated range of suppliers which makes it very hard to get information sufficiently where there is real cost. The level of scrutiny of that data needs has to be higher to ensure consistency. Would you reasonably expect comparability from two different funds of the same size?”
Neary made the point that not only would single securities be reported in different ways by individual fund managers, but that there would be timing issues from them too, which would make the value of the data questionable.
